AIRWAVE AUCTIONS FALTER AS SOURCE OF FUNDS FOR U.S.

By MARK LANDLER

Published: April 3, 1997

The Federal Communications Commission has announced that it will temporarily stop collecting payments on more than $10 billion worth of wireless communications licenses sold at auction last year, raising doubts about the Government's most favored new method for pouring money into the Treasury.

The decision by the F.C.C., which has championed the concept of selling the public airwaves to the highest bidder, comes in the same week that one of last year's largest bidders filed for bankruptcy and others are reportedly in danger of default.

So now, even though Congress has already committed at least $1 billion of the money, it is not clear whether the F.C.C. will ever collect the full $10.1 billion the Government thought it had raised in this, the largest airwave auction yet. And though the F.C.C., on paper at least, has raised nearly $23 billion since it began holding auctions in 1994, it now seems doubtful that future auctions will produce the huge windfall the Government has been counting on to help balance the budget.

''We have to be careful about assessing the revenue to be gained from auctions,'' said Representative Thomas J. Bliley Jr., the Virginia Republican who is chairman of the House Commerce Committee. ''If not, it can become fool's gold in the hands of budgeteers.''

On Monday, the F.C.C. announced that it would suspend the installment plan by which a group of communications companies were paying the Government for licenses auctioned off last year for a new class of wireless telephone technology known as Personal Communications Services, or P.C.S. The new P.C.S. networks will offer conventional cellular service, plus advanced data features, through a single hand-held phone.

One of the largest bidders, Pocket Communications, filed for bankruptcy protection on Tuesday and analysts said others looked unlikely to meet the next payment.

For their part, officials at the F.C.C. insisted yesterday that they were suspending the payments only so they could determine whether the Treasury Department or another Government agency should be put in charge of collecting the rest of the $10.1 billion.

''In no way is this order intended to state the commission's views on the financial health of the license holders,'' said Dan Phythyon, who was recently named chief of the F.C.C.'s wireless bureau.

But stock analysts said several of the most prominent and aggressive bidders for P.C.S. licenses had been unable to line up financing to pay for the licenses. And with the atmosphere on Wall Street turning sharply against all wireless telephone providers lately, they said at least a few of these companies were likely to follow Pocket into insolvency.

If that were to happen, the F.C.C. would have to take back the licenses and auction them a second time -- a prospect that industry executives predicted would radically reduce the amount of money raised.

More broadly, some executives complained that the F.C.C.'s aggressive schedule of additional airwave auctions was devaluing the licenses it had already issued. They said the market was becoming glutted with licenses for all manner of mobile telephone and data services.

''What the Government has done here is a disaster,'' said George F. Schmitt, the president and chief executive of Omnipoint Communications, a small P.C.S. company that paid $347 million for its New York City P.C.S. license.

Although Omnipoint recently switched on its service in New York City, the company's stock price has plunged 73 percent since last October on fears of ruinous competition in New York and other big markets, where there may eventually be five or more wireless competitors.

''Investors are asking, 'Why should I put money into this company when the F.C.C. keeps selling more spectrum?' '' Mr. Schmitt said.

One reason the F.C.C. has been taking up the gavel so often is that airwave auctions are perceived as a mother lode on Capitol Hill. Since Congress directed the F.C.C. to begin auctioning the airwaves in 1993, the commission has held 13 auctions and raised nearly $23 billion.

In addition to P.C.S. service, the commission has sold licenses to offer wireless cable television, digital audio radio and specialized mobile radio used by taxi dispatchers.

As the auction money owed has piled up, the Congressional Budget Office has increased its estimates of the revenue to be raised from future auctions. And these bullish numbers have often been factored into the Federal budget.

Bob Dole, the former Republican Presidential candidate, threw a spotlight on auctions when he argued that the F.C.C. should sell licenses for digital television to the highest bidder. Mr. Dole estimated that such an auction could raise $70 billion. And he has complained bitterly over the F.C.C.'s subsequent decision to simply grant them to existing broadcasters in order to smooth the transition to the new, digital generation of television.

The problem with any of the revenue forecasts, Mr. Phythyon said, is that the Government has actually collected only half of the $23 billion. The other half is supposed to be paid on the installment plan.